Correlation Between Visa and Iluka Resources
Can any of the company-specific risk be diversified away by investing in both Visa and Iluka Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Visa and Iluka Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Iluka Resources, you can compare the effects of market volatilities on Visa and Iluka Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Visa with a short position of Iluka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Iluka Resources.
Diversification Opportunities for Visa and Iluka Resources
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Iluka is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Iluka Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iluka Resources and Visa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Visa Class A are associated (or correlated) with Iluka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iluka Resources has no effect on the direction of Visa i.e., Visa and Iluka Resources go up and down completely randomly.
Pair Corralation between Visa and Iluka Resources
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.59 times more return on investment than Iluka Resources. However, Visa Class A is 1.71 times less risky than Iluka Resources. It trades about 0.11 of its potential returns per unit of risk. Iluka Resources is currently generating about -0.08 per unit of risk. If you would invest 26,932 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 4,576 from holding Visa Class A or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Visa Class A vs. Iluka Resources
Performance |
| Timeline |
| Visa Class A |
| Iluka Resources |
Visa and Iluka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Iluka Resources
The main advantage of trading using opposite Visa and Iluka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Iluka Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Iluka Resources will offset losses from the drop in Iluka Resources' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Iluka Resources vs. Black Rock Mining | Iluka Resources vs. Retail Food Group | Iluka Resources vs. Andean Silver Limited | Iluka Resources vs. Super Retail Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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